GLOVIA to be Resuscitated (Hopefully)

GLOVIA to be Resuscitated (Hopefully)
P.J. Jakovljevic - April 5th, 2000

Event Summary

In February, Fujitsu Limited announced its intention to acquire 100% ownership of GLOVIA International LLC, a California-based provider of business applications, e-commerce solutions, advanced technology, and world-class services for the digital marketplace, in which it currently holds a 30.5% interest. Based on a recently signed Memorandum of Understanding and subject to standard transaction closing conditions, Fujitsu intends to acquire by April 2000 the outstanding 69.5% interest in GLOVIA International now held by UK-based MDIS.

In making GLOVIA International a wholly owned subsidiary, Fujitsu intends to aggressively promote the web-enabled GLOVIA Enterprise Resource Planning (ERP) package software solution on a global basis in support of its Internet-focused solutions business strategy. In addition to the acquisition of MDIS's interest in GLOVIA International, the proposed transaction includes a perpetual license and rights to all source code for the Pro IV technologies underlying the GLOVIA products.

"As a total solutions provider of high-quality products and services, Fujitsu is making the fullest possible use of the Internet to provide a wide range of solutions that meet the diverse needs of customers and society around the world," commented Naoyuki Akikusa, President of Fujitsu Limited. "With our 'Everything on the Internet' business strategy building momentum, GLOVIA's 100 percent Web-enabled software and e-commerce initiatives will play a key role in helping us provide new and existing customers with technology and solutions to run their digital enterprises and boost their competitiveness in the global economy."

Tatsuzumi Furukawa, Group President, Application Software Business Group and Network Service Business Group, and Member of the Board of Fujitsu Limited, stated: "Through the rapid deployment of advanced business solutions, GLOVIA has delivered competitive advantages to many excellent customers throughout the world. GLOVIA's short implementations and modular solutions make it well positioned to assist customers in adapting to the business changes brought on by the Internet."

Matt O'Malley, President and CEO of GLOVIA International remarked, "I believe that the strength of the GLOVIA technology with the full backing of Fujitsu will allow GLOVIA to play a key role in the global B2B e-commerce market."

Market Impact

The GLOVIA/Fujitsu relationship dates back to 1992, when Fujitsu became a key distributor of the GLOVIA ERP package in the Asia-Pacific region, followed by Fujitsu becoming a strategic customer deploying the GLOVIA product suite in twenty-three of its factories worldwide. Fujitsu continued the relationship by becoming a co-development partner and eventually part owner of GLOVIA in 1997.

GLOVIA captured a number of renowned customers owing to its advanced offering at that time - a Web-enabled, modular product that was a close fit for some highly engineering involving industries (like electronics and automotive) and relatively fast implementations of between six to nine months. Its golden moment was replacing SAP as a solution for Dell Computer's manufacturing and supply chain management in 1998.

Then 1999 turned out to be sour. In July 1999, the word about a turmoil within GLOVIA's Asian operations spread. Shortly afterwards, the analyst community learned that the problems were both severe and global in scope. GLOVIA worldwide missed its numbers in Q1/Q2 1999. When MDIS (the other parent company besides Fujitsu) announced its Q2 results in July 1999, it said that it wanted to "reduce its exposure to the ERP industry." Shortly after that, Glovia laid off most of its direct Asian sales & support personnel. The announcement was that Fujitsu was going to take over sales and support throughout Asia. The layoff of about 45 people from its U.S. operations including about half of the sales force ensued too. GLOVIA has been hardly palpable ever since, due to unwillingness of both of its parents to commit additional funds to keeping its operations running.

Fujitsu has been a long-time distributor and user of GLOVIA's Web-based ERP products. We consider crucial the fact that Fujitsu acquired Pro-IV, a proprietary development tool, thereby eliminating the last impediment for its control of the whole GLOVIA operation. The purchase also gives the struggling GLOVIA much deeper pockets and global visibility as it continues to attack the low- and mid-market project-based manufacturing industry.

User Recommendations

GLOVIA is generally suited for manufacturers within the automotive, capital equipment, electronics, telecommunications, and industrial products industries. Companies needing software to address mixed-mode manufacturing (Engineer-to-Order through Repetitive), projects and contracts, and service management, may want to include GLOVIA on an initial list of vendors for a particular software selection. However, due to recent staff upheavals, potential clients in North America should conduct thorough research on available resources and reference sites of a regional GLOVIA office or an affiliate service provider when GLOVIA is included in the selection process.

We also encourage existing and potential users to familiarize themselves with the company's products offerings, since we believe that they will be in a position to better leverage their negotiating position with all vendors involved in a particular selection exercise.


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